financial statements for the fiscal year ended … · 2021. 1. 20. · town of bayfield, colorado...

TOWN OF BAYFIELD, COLORADO

FINANCIAL STATEMENTS

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011

WITH REPORT OF

CERTIFIED PUBLIC ACCOUNTANTS

TOWN OF BAYFIELD, COLORADO

Table of Contents Financial Section: Page Independent Auditors’ Report ................................................................................................................ 1 Management’s Discussion and Analysis ................................................................................................ 3 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets ......................................................................................................... 12 Statement of Activities ............................................................................................................ 13

Fund Financial Statements:

Balance Sheet – Governmental Funds ..................................................................................... 14 Reconciliation of the Governmental Funds Balance Sheet

to the Statement of Net Assets ............................................................................................. 15 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ................................................................................. 16 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ............................ 17 Statement of Net Assets - Proprietary Funds .......................................................................... 18

Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds ............................................................................... 19 Statement of Cash Flows - Proprietary Funds ......................................................................... 20 Notes to Financial Statements ................................................................................................. 21

Required Supplementary Information:

Schedule of Revenues, Expenditures, and Changes in Fund Balances – General Fund - Budget-and-Actual .......................................................... 42

Supplementary Information:

Schedule of Revenues, Expenditures, and Changes in Fund Balances – Capital Improvement Capital Project Fund - Budget-and-Actual ............ 46

Schedule of Revenues, Expenditures, and Changes in Fund Balances – Transportation Capital Project Fund - Budget-and-Actual ....................... 47

Schedule of Revenues, Expenditures, and Changes in Fund Balances – Debt Service Fund - Budget-and-Actual .................................................. 48

Schedule of Revenues, Expenditures, and Changes in Fund Balances – Conservation Trust Fund - Budget-and-Actual ........................................ 49

Schedule of Revenues, Expenses, and Changes in Available Resources – Enterprise Funds - Budget-and-Actual:

Water Fund ....................................................................................................................... 50 Sewer Fund ....................................................................................................................... 51 Garbage Fund .................................................................................................................... 52

Colorado Water Resources Loan Agreement Requirements ................................................... 53 Local Highway Finance Report ............................................................................................... 55

Compliance Section:

Report on Internal Control over Financial Reporting and on Compliance and Other Matters .................................................................................... 59

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Independent Auditors’ Report

The Honorable Mayor and Board Town of Bayfield, Colorado We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Bayfield, Colorado, as of and for the year ended December 31, 2011, which collectively comprise the Town’s basic financial statements as listed in the table of contents. These basic financial statements are the responsibility of the Town’s management. Our responsibility is to express an opinion on these basic financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of governmental activities, the business type activities, each major fund, and the aggregate remaining fund information of the Town of Bayfield, Colorado, as of December 31, 2011, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated May 25, 2012, on our consideration of the Town of Bayfield’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The Management’s Discussion and budgetary comparison schedules are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it.

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www.hintonburdick.com

MEMBERS: CHAD B. ATKINSON, CPA KENNETH A. HINTON, CPA KRIS J. BRAUNBERGER, CPA MORRIS J PEACOCK, CPA DEAN R. BURDICK, CPA PHILLIP S. PEINE, CPA ROBERT S. COX, CPA MICHAEL K. SPILKER, CPA TODD B. FELTNER, CPA KEVIN L. STEPHENS, CPA K. MARK FROST, CPA MARK E. TICHENOR, CPA

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Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town’s basic financial statements. The budgetary comparison schedules, loan requirement disclosures, and the Local Highway Finance Report as listed in the table of contents are presented for purposes of additional analysis as required by the State of Colorado and are not a required part of the basic financial statements of the Town. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.

HintonBurdick, PLLC May 25, 2012

catkinsonHB PLLC

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TOWN OF BAYFIELD, COLORADO MANAGEMENT’S DISCUSSION AND ANALYSIS

For the Year Ended December 31, 2011 As management of the Town of Bayfield (Town), we offer readers of the Town’s financial statements this narrative overview and analysis of the financial activities of the Town for the year ended December 31, 2011. Please read it in conjunction with the accompanying basic financial statements. FINANCIAL HIGHLIGHTS Total assets exceeded total liabilities (net assets) by $30.7 million at the close of the fiscal

year. Total governmental and business-type net assets increased by a combined total of $8,420,155. The total cost of all Town programs for 2011 was $3,825,567. The Colorado Department of Transportation transferred Highway 160B, now called Bayfield

Parkway, to the Town during 2011 along with $6.8 million in maintenance incentive funds. The general fund unassigned fund balance at the end of 2011 was $393,703 which is 23% of

total General fund expenditures. USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The three components of the financial statements are: (1) Government-wide financial statements which include the Statement of Net Assets and the Statement of Activities. These statements provide information about the activities of the Town as a whole. (2) Fund financial statements tell how these services were financed in the short term as well as what remains for future spending. Fund financial statements also report the Town’s operations in more detail than the government-wide statements by providing information about the Town’s most significant funds. (3) Notes to the financial statements. Reporting the Town as a Whole The Statement of Net Assets and the Statement of Activities (Government-wide) A frequently asked question regarding the Town’s financial health is whether the year’s activities contributed positively to the overall financial well-being. The Statement of Net Assets and the Statement of Activities report information about the Town as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year’s revenues and expenses are taken into account regardless of when cash is received or paid.

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These two statements report the Town’s net assets and changes in them. Net assets, the difference between assets and liabilities, are one way to measure the Town’s financial health, or financial position. Over time, increases or decreases in net assets are an indicator of whether the financial health is improving or deteriorating. However, it is important to consider other non-financial factors such as changes in the condition of the Town’s roads to accurately assess the overall health of the Town. The Statement of Net Assets and the Statement of Activities, present information about the following: Government activities – All of the Town’s basic services are considered to be governmental

activities, including general government, public safety, public works/streets, parks and recreation, and interest on long-term debt. Sales taxes, property taxes, franchise taxes, intergovernmental revenues and charges for services finance most of these activities.

Proprietary activities/Business type activities – The Town charges a fee to customers to cover

most of the cost of the services provided. Reporting the Town’s Most Significant Funds Fund Financial Statements The fund financial statements provide detailed information about the most significant funds—not the Town as a whole. Some funds are required to be established by State law and by bond covenants. However, management establishes many other funds which aid in the management of money for particular purposes or meet legal responsibilities associated with the usage of certain taxes, grants, and other money. The Town’s two major kinds of funds, governmental and proprietary, use different accounting approaches as explained below. Governmental funds – Most of the Town’s basic services are reported in governmental funds.

Governmental funds focus on how resources flow in and out with the balances remaining at year-end that are available for spending. These funds are reported using an accounting method called the modified accrual accounting method, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the Town’s general government operations and the basic services it provides. Government fund information shows whether there are more or fewer financial resources that can be spent in the near future to finance the Town’s programs. We describe the relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds in a reconciliation included with the Basic Financial Statements and in footnote 2.

Proprietary funds – When the Town charges customers for the services it provides, these

services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Assets and the Statement of Activities.

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GOVERNMENT-WIDE FINANCIAL ANALYSIS Net assets may serve over time as a useful indicator of the Town’s financial position. The Town’s combined assets exceed liabilities by $30.7 million as of December 31, 2011 as shown in the following condensed statement of net assets. Of this amount, $3,464,113 is unrestricted and available to meet the Town’s ongoing financial obligations. By far the largest portion of net assets is the investment in capital assets (net of related debt) of $20,470,872 (66.63% of total net assets). This amount reflects the investment in all capital assets (e.g. infrastructure, land, buildings, and equipment) less any related debt used to acquire those assets that are still outstanding. These capital assets are used to provide services to citizens; consequently, these assets are not available for future spending. Although the investment in capital assets is reported net of debt, it should be noted that the resources needed to repay this debt must be provided from other sources since capital assets themselves cannot be used to liquidate these liabilities. The Town has chosen to account for its water, sewer, and garbage operations in enterprise funds which are shown as Business Activities. The following table summarizes the Town’s governmental and business-type net assets as of December 31, 2011 and 2010:

TOWN OF BAYFIELD, COLORADO Statement of Net Assets

An additional portion of net assets, $6,787,318, represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets, $3,464,113 (11.287% of total net assets), may be used to meet the government’s ongoing obligations to citizens and creditors.

12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010

Current and other assets 9,225,930$ 3,865,005$ 1,455,591$ 1,299,246$ 10,681,521$ 5,164,251$ Capital assets 13,858,077 11,539,403 13,792,974 14,040,125 27,651,051 25,579,528

Total assets 23,084,007 15,404,408 15,248,565 15,339,371 38,332,572 30,743,779

Long-term liabilities outstanding 2,395,018 2,711,688 4,837,796 5,075,486 7,232,814 7,787,174 Other liabilities 369,092 603,803 8,363 50,654 377,455 654,457

Total liabilities 2,764,110 3,315,491 4,846,159 5,126,140 7,610,269 8,441,631 Net assets:

Invested in capital assets, netof related debt 11,504,541 8,821,833 8,966,331 8,975,757 20,470,872 17,797,590

Restricted 6,703,000 1,153,206 84,318 109,545 6,787,318 1,262,751 Unrestricted 2,112,356 2,113,878 1,351,757 1,127,929 3,464,113 3,241,807

Total net assets 20,319,897$ 12,088,917$ 10,402,406$ 10,213,231$ 30,722,303$ 22,302,148$

Governmentalactivities activities

Business-typeCombined Total

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Governmental Activities The cost of all Governmental activities this year was $2,438,224 as shown in the Changes in net Assets statement below. $187,470 of this cost was paid for by those who directly benefited from the programs. $8,769,604 was subsidized by grants or contributions received from other governmental organizations for both capital and operating activities. Overall governmental program revenues, including intergovernmental aid and fees for services were $8,957,074. General taxes and investment earnings totaled $1,679,194. The Town’s programs include: General Government, Public Safety, Public Works/Streets, and Parks & Recreation. Each program’s revenues and expenses are presented below.

TOWN OF BAYFIELD, COLORADO Changes in Net Assets

12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010Revenues:Program revenues:

Charges for services 187,470$ 199,832$ 1,347,632$ 1,479,477$ 1,535,102$ 1,679,309$ Operating grants and

contributions 221,536 376,737 - - 221,536 376,737 Capital grants and

contributions 8,548,068 501,360 236,257 646,392 8,784,325 1,147,752 General revenues:

Taxes 1,666,527 1,657,638 - - 1,666,527 1,657,638 Investment earnings 12,667 21,396 - - 12,667 21,396 Gain on sales of assets - 211,144 - - - 211,144 Other revenue/(expense) - - 25,565 4,870 25,565 4,870

Total revenues 10,636,268 2,968,107 1,609,454 2,130,739 12,245,722 5,098,846

Expenses:General government 614,928 605,481 - - 614,928 605,481 Public safety 577,128 504,680 - - 577,128 504,680 Public works/streets 633,995 871,713 - - 633,995 871,713 Parks and recreation 291,670 280,309 - - 291,670 280,309 Health and welfare 35,867 110,058 - - 35,867 110,058 Community support 179,110 336,005 - - 179,110 336,005 Interest on long-term debt 105,526 166,322 - - 105,526 166,322 Water - - 458,795 512,157 458,795 512,157 Sewer - - 798,503 944,487 798,503 944,487 Garbage - - 130,045 114,830 130,045 114,830

Total expenses 2,438,224 2,874,568 1,387,343 1,571,474 3,825,567 4,446,042

Increase (decrease) in net assets before transfers 8,198,044 93,539 222,111 559,265 8,420,155 652,804

Transfers 32,936 (25,032) (32,936) 25,032 - - Net assets, beginning 12,088,917 11,043,577 10,213,231 9,319,726 22,302,148 20,363,303 Prior period adjustment - 976,833 - 309,208 - 1,286,041 Net assets, ending 20,319,897$ 12,088,917$ 10,402,406$ 10,213,231$ 30,722,303$ 22,302,148$

Governmental Business-typeactivities activities Combined Total

Total resources available during the year to finance governmental operations were $22,725,185 consisting of Net assets at January 1, 2011 of $12,088,917, program revenues of $8,957,074, and General Revenues of $1,679,194. Total Governmental Activities expenses during the year were $2,438,224 and transfers from business-type funds were $32,936; thus Governmental Net Assets were increased by $8,230,980 to $20,319,897.

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The following graphs compare program expenses to program revenues and provide a breakdown of revenues by source for all governmental activities:

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

Generalgovernment

Public safety Publicworks/streets

Parks andrecreation

Health and welfare Communitysupport

Expenses and Program Revenues - Governmental Activities(in Thousands)

Expenses

Revenues

Charges for services1.8%

Operating grants & contributions

2.1%

Capital grants & contributions

80.4%

Taxes15.7%

Other revenues0.1%

Revenue By Source - Governmental Activities

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Business Type Activities Net assets of the Business Type activities at December 31, 2011, as reflected in the Statement of Net Assets were $10.4 million. The cost of providing all Proprietary (Business Type) activities this year was $1,387,343. As shown in the statement of Changes in Net Assets, the amounts paid by users of the system were $1,347,632 and there was $236,257 subsidized by capital grants and contributions. Investment earnings and other revenues were $25,565. Transfers to governmental activities totaled $32,936. The Net Assets increased by $189,175. The following graphs compare the total business-type activity expenses by service to the charges for those services and the graph at the bottom of the page provides a breakdown of the total revenues for business-type activities.

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

Water Sewer Garbage

Expenses and Charges for Services - Business- type Activities

Expenses

Charges for services

Water34.3%

Sewer43.5%

Garbage7.3%

Operating & Capital Grants

14.9%

Revenue By Source - Business-type Activities

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Financial Analysis of the Government’s Funds As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds: The focus of the Town’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the Town’s governmental funds reported combined ending fund balances of $7,879,534, an increase of $5,671,003 in comparison with the prior year. Approximately 5.0% ($393,703) constitutes unassigned fund balance, which is available for spending at the government’s discretion. The Town has four major governmental funds, the general fund, the debt service fund, the capital improvement fund, and the transportation fund. The General fund is the primary operating fund for the Town. At December 31, 2011, unassigned fund balance in the General fund was $393,703. As a measure of the General fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Total unassigned fund balance represents 23% of the total General fund expenditures. The fund balance of the Town’s General fund increased by $122,346 for the year ended December 31, 2011. As compared to the prior year, the General fund revenues were down due to decreased intergovernmental revenues. General fund expenses increased due to bringing the parks and recreation activities into the General fund. The special assessments and interest earned in the debt service fund exceeded total expenditures in the fund by $800. The Capital Improvement fund received higher sales tax revenues than budgeted. The actual increase in fund balance was $39,894. The Transportation fund was a new fund created in 2011 to account for maintenance incentive revenues received from the Colorado Department of Transportation in connection with the transfer of US Highway 160B, now called the Bayfield Parkway, to the Town of Bayfield.. Proprietary funds: The Town’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Net assets and changes in net assets for the year-ended December 31, 2011 for the Town’s three enterprise funds (Water, Sewer, and Garbage) are as follows:

Water Sewer Garbage TotalUnrestricted net assets 758,793$ 554,165$ 38,799$ 1,351,757$ Total net assets 4,563,340 5,745,198 93,868 10,402,406 Change in net assets 179,711 24,322 (14,858) 189,175

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The capital assets in the water fund increased $164,750 for a tank recoating project. No other significant capital outlays occurred during the year. Budgetary Highlights General fund revenues of $1,778,004 were less than budgeted revenues of 1,811,174 by $33,170. The most significant factor contributing to this shortfall is related to budgeted grant revenues of $238,084 of which only $201,084 was received during the year. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The capital assets of the Town are those assets that are used in performance of Town functions including infrastructure assets. Capital Assets include equipment, buildings, land, system improvements, park facilities and roads. At the end of 2011, net capital assets of the government activities totaled $13.86 million and the net capital assets of the business-type activities were $13.79 million. The most significant governmental capital additions were the Bayfield Parkway acquisition (formerly Highway 160B) and the Bayfield Parkway overlay. The most significant business-type capital addition was a tank recoating. Depreciation on capital assets for both government activities and business-type activities is recognized in the Government-Wide financial statements. (See note 6 to the financial statements.) Debt At year-end, the Town had $2,395,018 in governmental type debt, and $4,837,796 in proprietary debt. During the current fiscal year, the Town’s total debt decreased by $554,362. (See note 7 to the financial statements for detailed descriptions.) NEXT YEAR’S BUDGET AND ECONOMIC FACTORS In considering the Town Budget for the year 2012, the Town Board of Trustees and management were cautious as to the growth of revenues and expenditures due to a slow economy. CONTACTING THE TOWN’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the Town’s finances and to show the Town’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Finance Director at: 1199 US Highway 160B Bayfield, Colorado 81122.

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BASIC FINANCIAL STATEMENTS


December 31, 2011

The accompanying notes are an integral part of the financial statements.

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Governmental Business-typeActivities Activities Total

Assets

Cash and cash equivalents 1,997,957$ 1,295,264$ 3,293,221$ Receivables (net of allowance) 431,697 50,774 482,471 Internal balances 71,000 (71,000) - Inventories 20,252 96,235 116,487 Temporarily restricted assets:

Cash and cash equivalents 5,676,317 84,318 5,760,635 Special improvement district receivable 1,028,707 1,028,707

Capital assets (net of accumulated depreciation):Land 752,600 103,766 856,366 Construction in progress 16,823 - 16,823 Buildings 5,838,431 113,589 5,952,020 Machinery and equipment 150,235 277,188 427,423 Vehicles 223,316 - 223,316 Infrastructure and systems 6,876,672 13,298,431 20,175,103

Total assets 23,084,007 15,248,565 38,332,572

Liabilities

Accounts payable and other current liabilities 101,741 8,363 110,104 Interest payable 51,403 - 51,403 Unearned revenue 215,948 - 215,948 Noncurrent liabilities: Due within one year 351,608 255,380 606,988 Due in more than one year 2,043,410 4,582,416 6,625,826

Total liabilities 2,764,110 4,846,159 7,610,269

Net Assets

Invested in capital assets, net of related debt 11,504,541 8,966,331 20,470,872 Restricted for:

Parks and recreation 88,087 - 88,087 Public works 5,540,199 - 5,540,199 Debt service 1,074,714 84,318 1,159,032

Unrestricted 2,112,356 1,351,757 3,464,113

Total Net Assets 20,319,897$ 10,402,406$ 30,722,303$

TOWN OF BAYFIELD, COLORADO Statement of Activities

For the Year Ended December 31, 2011


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Governmental Business-typeFunctions/Programs Expenses Activities Activities TotalGovernmental activities:

General government 614,928$ 53,450$ 14,500$ -$ (546,978)$ -$ (546,978)$ Public safety 577,128 23,732 - 4,974 (548,422) - (548,422) Public works/streets 633,995 47,063 - 8,436,196 7,849,264 - 7,849,264 Parks and recreation 291,670 52,346 19,899 106,898 (112,527) - (112,527) Health and welfare 35,867 10,879 8,027 - (16,961) - (16,961) Community support 179,110 - 179,110 - - - - Interest on long-term debt 105,526 - - - (105,526) - (105,526)

Total governmental activities 2,438,224 187,470 221,536 8,548,068 6,518,850 - 6,518,850

Business-type activities:Water 458,795 542,804 - 106,745 - 190,754 190,754 Sewer 798,503 689,738 - 129,512 - 20,747 20,747 Garbage 130,045 115,090 - - - (14,955) (14,955)

Total business-type activities 1,387,343 1,347,632 - 236,257 - 196,546 196,546

Total primary government 3,825,567$ 1,535,102$ 221,536$ 8,784,325$ 6,518,850 196,546 6,715,396

General Revenues:Taxes:

Property tax 230,545 - 230,545 Sales tax 1,164,745 - 1,164,745 Other taxes 257,912 - 257,912 Franchise tax 13,325 - 13,325

Unrestricted investment earnings 12,667 25,565 38,232 Transfers 32,936 (32,936) -

Total general revenues & transfers 1,712,130 (7,371) 1,704,759

Change in net assets 8,230,980 189,175 8,420,155

Net assets - beginning 12,088,917 10,213,231 22,302,148

Net assets - ending 20,319,897$ 10,402,406$ 30,722,303$

Charges forServices

OperatingGrants and

Contributions

CapitalGrants and

Contributions

Program Revenues Net (Expense) Revenue and Changes in Net AssetsPrimary Government

TOWN OF BAYFIELD, COLORADO Balance Sheet

Governmental Funds December 31, 2011


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Capital Nonmajor

Conservation TotalGeneral Debt Service Improvement Transportation Trust Governmental

Assets Fund Fund Fund Fund Fund Funds

Cash and cash equivalents 1,033,704$ -$ 964,253$ -$ -$ 1,997,957$ Receivables, net of allowances: 522 1,028,707 - - - 1,029,229 Due from other governments 377,711 - 53,464 - - 431,175 Due from other funds - - 71,000 - - 71,000 Inventories 20,252 - - - - 20,252 Restricted cash and investments - 46,007 64,371 5,540,199 25,740 5,676,317

Total Assets 1,432,189$ 1,074,714$ 1,153,088$ 5,540,199$ 25,740$ 9,225,930$

Liabilities and Fund Balances

Liabilities:Accounts payable 43,875$ -$ 36$ -$ 2,024$ 45,935$ Accrued liabilities 55,806 - - - - 55,806 Deferred revenue 215,948 1,028,707 - - - 1,244,655

Total liabilities 315,629 1,028,707 36 - 2,024 1,346,396

Fund balances:Nonspendable 20,252 - - - - 20,252 Restricted for:

Emergency reserve 101,653 - - - - 101,653 Debt service - 46,007 - - - 46,007 Capital outlay - - 64,371 5,540,199 23,716 5,628,286

Committed to:Capital outlay - - 1,088,681 - - 1,088,681

Assigned to:Public Safety 1,200 - - - - 1,200 Health and welfare 12,002 - - - - 12,002 Subsequent years 587,750 - - - - 587,750

Unassigned 393,703 - - - - 393,703

Total fund balances 1,116,560 46,007 1,153,052 5,540,199 23,716 7,879,534

Total liabilities and fund balances 1,432,189$ 1,074,714$ 1,153,088$ 5,540,199$ 25,740$ 9,225,930$

TOWN OF BAYFIELD, COLORADO Reconciliation of the Balance Sheet of Governmental Funds

to the Statement of Net Assets December 31, 2011


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Total fund balances - governmental funds 7,879,534$

Amounts reported for governmental activities in the statement of net assets are different because:

Some assets are not available to pay for current period expenditures,and therefore, are deferred in the funds. 1,028,707

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.

Governmental capital assets 17,400,269 Accumulated depreciation (3,542,192)

13,858,077

Long-term liabilities are not due and payable in the current periodand therefore are not reported in the funds.

Capital leases payable (1,443,536) Bonds payable (910,000) Interest payable (51,403) Compensated absences (41,482)

Total net assets - governmental activities 20,319,897$

TOWN OF BAYFIELD, COLORADO Statement of Revenues, Expenditures and Changes in

Fund Balances - Governmental Funds For the Year Ended December 31, 2011


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Capital Nonmajor

Conservation TotalGeneral Debt Service Improvement Transportation Trust alFund Fund Fund Fund Fund Funds

RevenuesTaxes 1,415,863$ -$ 250,665$ -$ -$ 1,666,528$ Licenses and permits 44,606 - - - - 44,606 Intergovernmental 201,084 - 164,501 6,800,000 19,899 7,185,484 Fines and forfeitures 17,568 - - - - 17,568 Charges for services 85,286 - - - - 85,286 Interest revenue 2,266 209 10,192 - - 12,667 Special assessments - 152,562 - - - 152,562 In lieu of parks fee - - 6,528 - - 6,528 Other revenues 11,331 - 25,000 - - 36,331

Total revenues 1,778,004 152,771 456,886 6,800,000 19,899 9,207,560

ExpendituresCurrent:

General government 502,280 1,696 - - - 503,976 Public safety 523,655 - - - - 523,655 Public works/streets 235,080 - - - - 235,080 Non-departmental 12,611 - - - - 12,611 Parks and recreation 243,994 - - - - 243,994

Payments to sub recipients 179,110 - - - - 179,110 Capital outlay 11,063 - 185,046 1,259,801 - 1,455,910 Debt service:

Principal retirement - 95,000 213,706 - - 308,706 Interest on long-term debt - 55,275 54,176 - - 109,451

Total expenditures 1,707,793 151,971 452,928 1,259,801 - 3,572,493

Excess of revenuesover (under) expenditures 70,211 800 3,958 5,540,199 19,899 5,635,067

Other financing sources (uses):Transfers in 52,135 - 32,936 - - 85,071 Transfers out - - - - (52,135) (52,135) Sale of assets - - 3,000 - - 3,000

Total other financing sources (uses) 52,135 - 35,936 - (52,135) 35,936

Net change in fund balances 122,346 800 39,894 5,540,199 (32,236) 5,671,003

Fund balance, beginning of year 994,214 45,207 1,113,158 - 55,952 2,208,531

Fund balance, end of year 1,116,560$ 46,007$ 1,153,052$ 5,540,199$ 23,716$ 7,879,534$

TOWN OF BAYFIELD, COLORADO Reconciliation of the Statement of Revenues, Expenditures

and Changes in Fund Balances of Governmental Funds To the Statement of Activities

For the Year Ended December 31, 2011


17

Amounts reported for governmental activities in the statement of activities aredifferent because:

Net change in fund balances - total governmental funds 5,671,003$

Governmental funds report capital outlays as expenditures. However, in the

Capital outlay 1,395,579 Depreciation expense (573,725)

821,854

The net effect of various transactions involving capital assets(i.e. sales and donations) is to increase net assets 1,499,820

Governmental funds report the gross proceeds from the sale of capital assets as

(3,000)

Repayment of long term debt principal is an expenditure in the governmental funds,but the repayment reduces long-term liabilities in the statement of net assets. 308,706

Accrued interest for long-term debt is not reported as an expenditure for thecurrent period while it is recorded in the statement of activities. 3,925

Compensated absences expenses reported in the statement of activities do not

7,964

Deferred revenues in the governmental funds were recognized as revenues in the statement of activities in previous years. (79,292)

Change in net assets of governmental activities 8,230,980$

require the use of current financial resources and therefore are not reported as expenditures in governmental funds.

statement of activities, the costs of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay exceeded depreciation in the current period.

revenue. However, in the statement of activities, the gain/(loss) on the sale of capital assets is reported net of its net book value.


Proprietary Funds December 31, 2011


18

Water Sewer Garbage CombinedFund Fund Fund Total

AssetsCurrent assets:

Cash 769,782$ 490,890$ 34,592$ 1,295,264$ Receivables (net of allowance) 17,719 28,455 4,600 50,774 Inventory 49,595 46,640 - 96,235 Restricted cash and investments - 84,318 - 84,318

Total current assets 837,096 650,303 39,192 1,526,591

Noncurrent assets:Land 55,858 47,908 - 103,766 Buildings 9,250 250,993 57,967 318,210 Improvements and system 5,346,482 11,036,278 - 16,382,760 Machinery and equipment 150,154 208,220 - 358,374 Accumulated depreciation (1,485,696) (1,881,542) (2,898) (3,370,136)

Total noncurrent assets 4,076,048 9,661,857 55,069 13,792,974 Total assets 4,913,144$ 10,312,160$ 94,261$ 15,319,565$

Liabilities Current liabilities:

Accounts payable 2,834 5,529 - 8,363 Due to other funds 71,000 - - 71,000 Loans payable - current 33,359 210,868 - 244,227 Compensated absences - current 4,469 6,291 393 11,153

Total current liabilities 111,662 222,688 393 334,743

Noncurrent liabilities:Loans payable (net of current portion) 238,142 4,344,274 - 4,582,416 Compensated absences (net of current portion) - - - -

Total long-term debt 238,142 4,344,274 - 4,582,416

Total liabilities 349,804 4,566,962 393 4,917,159

Net assetsInvested in capital assets, net of related debt 3,804,547 5,106,715 55,069 8,966,331 Restricted - 84,318 - 84,318 Unrestricted 758,793 554,165 38,799 1,351,757

Total net assets 4,563,340$ 5,745,198$ 93,868$ 10,402,406$

TOWN OF BAYFIELD, COLORADO Statement Revenues, Expenses, and Changes in Fund Net Assets

Proprietary Funds For the Year Ended December 31, 2011


19


Operating revenuesCharges for services 542,804$ 689,663$ 115,090$ 1,347,557$ Other revenues - 75 - 75

Total operating revenues 542,804 689,738 115,090 1,347,632

Operating expensesSalaries and wages 99,856 148,341 12,691 260,888 Water storage 15,656 - - 15,656 Pumping costs 38,781 - - 38,781 Water treatment 57,744 - - 57,744 Transmission and distribution 49,165 - - 49,165 Collection and transmission - 21,150 - 21,150 Sewer treatment - 70,648 - 70,648 General operations - 60,180 114,053 174,233 Administrative 30,346 35,178 1,853 67,377 Miscellaneous - 1,772 - 1,772 Depreciation 153,132 306,269 1,448 460,849

Total operating expenses 444,680 643,538 130,045 1,218,263 Operating income 98,124 46,200 (14,955) 129,369

Non-operating revenues (expenses)Interest income 2,375 826 97 3,298 Bond premium amortization - 10,868 - 10,868 Principal reduction from lender - 11,399 - 11,399 Interest expense and fiscal charges (14,115) (105,051) - (119,166) Decommissioning costs - (49,914) - (49,914) Grant revenue - 29,662 - 29,662 Connection and tap fees 106,745 99,850 - 206,595 Total non-operating revenues (expenses) 95,005 (2,360) 97 92,742

Income before transfers 193,129 43,840 (14,858) 222,111 Transfers:

Transfers out (13,418) (19,518) - (32,936) Change in net assets 179,711 24,322 (14,858) 189,175

Total net assets, beginning of year 4,383,629 5,720,876 108,726 10,213,231 Total net assets, end of year 4,563,340$ 5,745,198$ 93,868$ 10,402,406$

TOWN OF BAYFIELD, COLORADO Statement of Cash Flows

Proprietary Funds For the Year Ended December 31, 2011


20


Cash flows from operating activities:Cash received from customers, service fees 562,878$ 706,223$ 116,519$ 1,385,620$ Cash received from customers, other - 75 - 75 Cash paid to suppliers (204,717) (181,481) (114,253) (500,451) Cash paid to employees (130,202) (183,804) (14,450) (328,456) Cash paid for interfund services (20,000) - - (20,000)

Net cash flows from operating activities 207,959 341,013 (12,184) 536,788

Cash flows from noncapital financing activities:Transfers from/(to) other funds (13,418) (19,518) - (32,936)

Net cash flows from noncapital financing activities (13,418) (19,518) - (32,936)

Cash flows from capital and related financing activities:

Purchase of capital assets (164,750) (48,946) - (213,696) Principal paid on long-term debt (31,857) (183,601) - (215,458) Interest paid (14,115) (105,051) - (119,166) Decommissioning costs - (49,914) - (49,914) Capital grants - 29,662 - 29,662 Connection and tap fees 106,745 99,850 - 206,595

Net cash flows from capital and related financing activities (103,977) (258,000) - (361,977)

Cash flows from investing activities:Interest on investments 2,375 826 97 3,298

Net change in cash and cash equivalents 92,939 64,321 (12,087) 145,173

Cash and cash equivalents, including restricted cash beginning of year 676,843 510,887 46,679 1,234,409

Cash and cash equivalents, including restricted cash end of year 769,782$ 575,208$ 34,592$ 1,379,582$

Reconciliation of operating income to net cash provided by operating activities:

Net operating income (loss) 98,124$ 46,200$ (14,955)$ 129,369$ Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation/amortization 153,132 306,269 1,448 460,849 Changes in operating assets and liabilities:

(Increase)/decrease in receivables 20,074 16,560 1,429 38,063 Increase/(decrease) in payables (1,025) (2,591) (200) (3,816) Increase/(decrease) in accrued liabilities & deposits (38,251) (285) 94 (38,442) Increase/(decrease) in due to other funds (20,000) - - (20,000)

Net cash flows from operating activities 207,959$ 341,013$ (12,184)$ 536,788$

Supplemental schedule of non-cash financing and investing activities:

Bond premium amortization -$ 10,868$ -$ 10,868$ Principal reduction from lender -$ 11,399$ -$ 11,399$

TOWN OF BAYFIELD, COLORADO Notes to the Financial Statements

December 31, 2011

21

Note 1. Summary of Significant Accounting Policies

General

The accounting policies of the Town of Bayfield, Colorado (the Town) conform to U.S. generally accepted accounting principles as applicable to governments. The following is a summary of the more significant policies.

Reporting Entity

The government is a statutory municipality with a mayor – Board form of government with six elected Board members. As required by accounting principles generally accepted in the United States of America, these financial statements present the government and any potential component units, entities for which the government is considered to be financially accountable. However, there are no blended or discretely presented component units that are applicable in defining the Town’s reporting entity. The financial statements include all funds and account groups that account for activities over which the Town’s elected mayor and Board exercise primary financial management and oversight responsibility. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the non-fiduciary activities of the primary government. For the most part, the effect of the inter-fund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.


December 31, 2011

22

Note 1. Summary of Significant Accounting Policies, Continued

Measurement Focus, Basis of Accounting, and Financial Statement Presentation Government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met. The use of financial resources to acquire capital assets are capitalized as assets in the government-wide financial statements, rather than as an expenditure. Proceeds from long-term debt are recorded as a liability in the government-wide financial statements, rather than as another financing source. Amounts paid to reduce long-term debt of the Town are reported as a reduction of a related liability, rather than an expenditure in the government-wide financial statements.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Town considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, sales taxes, franchise tax, other taxes, licenses and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. When applicable, only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the Town. The Town reports the following major governmental funds:

The General Fund is the Town’s primary operating fund. It accounts for all financial resources of the general government, except for those required to be accounted for in another fund. The Debt Service Fund is used to account for resources to meet current and future debt service requirements on the Special Improvement District. The Capital Improvement Fund accounts for acquisition or construction of major capital facilities (other than those belonging to enterprise funds).


December 31, 2011

23


The Transportation Fund accounts for maintenance incentive revenues received from the Colorado Department of Transportation in connection with the transfer of US Highway 160B, now called the Bayfield Parkway, to the Town of Bayfield.

The Town reports the following major proprietary funds:

The Water Fund accounts for the activities related to the Town’s water wells, treatment facilities and distribution operations. The Sewer Fund accounts for the activities related to the Town’s sewer collection and treatment operations.

Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The government has elected not to follow subsequent private-sector guidance.

As a general rule, the effect of inter-fund activity has been eliminated from the government-wide financial statements. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the proprietary funds are charges to customers for sales and services. Operating expenses for the proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Deposits and Investments The Town’s cash and cash equivalents are considered to be cash-on-hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition for purposes of this note and the statement of cash flows.


December 31, 2011

24


Receivables and Payables

Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due to” or “due from other funds. All trade accounts receivable in the enterprise funds are shown net of an allowance for uncollectible accounts. Due to the nature of the accounts receivable in governmental type activities, management does not consider an allowance for uncollectible accounts receivable necessary or material. Therefore, no allowance for uncollectible accounts receivable is presented. Property Taxes – Deferred Revenue

Property tax revenues are recognized as revenues in the year collected or if collected within 60 days thereafter unless they are prepaid. Property taxes levied in the current year and not collected within 60 days of year-end are not deemed available to pay current liabilities and therefore the receivable is recorded as deferred revenue in the governmental funds. Property taxes for the current year are levied by the County and attach as a lien on property the following January 1. They are payable in full by April 30 or in two equal installments due February 28 and June 15. The County also levies various personal property taxes during the year. Inventories Governmental fund-type inventories consist of street maintenance materials and other supplies and are valued at cost using the first-in/first-out (FIFO) method. Inventories for business type activities consist of various parts and supplies and are valued at cost using the first-in/first-out (FIFO) method.

Capital Assets

Capital assets, which include; property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activity columns in the government-wide financial statements. Capital assets are defined by the Town as assets with an individual cost of more than $5,000 and an estimated useful life of three years or more. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. Property, plant and equipment is depreciated using the straight-line method over the following estimated useful lives:

Buildings and improvements Utility plant and improvements Machinery, equipment and vehicles Infrastructure

7 to 40 years 39 to 40 years 5 to 20 years 7 to 25 years


December 31, 2011

25


Compensated Absences

For governmental funds, amounts of vested or accumulated vacation and sick leave that are not expected to be liquidated with expendable available financial resources are reported as liabilities in the government-wide statement of net assets and as expenses in the government-wide statement of activities. No expenditures are reported for these amounts in the fund financial statements. Vested or accumulated vacation and sick leave in the proprietary fund are recorded as an expense and a liability of that fund as the benefits accrue to the employees and are thus recorded in both the government-wide financial statements and the individual fund financial statements. Long-term Obligations

In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums, discounts, and issuance costs are deferred and amortized over the life of the applicable debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Net Assets and Fund Equity When both restricted and unrestricted resources are available for use, it is the Town’s policy to use restricted resources first, then unrestricted resources as they are needed. When both committed, assigned, or unassigned resources are available for use, it is the Town’s policy to use committed resources first, followed by assigned resources and then unassigned resources as they are needed. Equity is classified in the government-wide financial statements and in the proprietary fund financial statements as net assets and is displayed in three components as follows:

Invested in capital assets, net of related debt represents capital assets, net of accumulated depreciation and reduced by the outstanding balances of any long-term debt attributable to the acquisition, construction, or improvement of those assets. Restricted net assets are net assets with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. Unrestricted net assets are all other net assets that do not meet the definition of “restricted” or “invested in capital assets, net of related debt.”


December 31, 2011

26


Equity is classified in the governmental fund financial statements as fund balance and is further classified as nonspendable, restricted, committed, assigned or unassigned as follows:

Nonspendable fund balance cannot be spent because it is either (1) not in spendable form, or (2) legally or contractually required to be maintained intact. Restricted fund balance is fund balance with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. Committed fund balance can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision making authority, the Town Board. A resolution, ordinance or vote by the Town Board is required to establish, modify or rescind a fund balance commitment. Assigned fund balance is constrained by the government’s intent to be used for specific purposes, but are neither restricted nor committed. The Town Manager is authorized to assign amounts to a specific purpose in accordance with the Town’s budget policy. Unassigned fund balance is a residual classification of the General Fund. This classification represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to a specific purpose within the General Fund.

Note 2. Reconciliation of Government-Wide and Fund Financial Statements

The governmental fund balance sheet includes a reconciliation between total governmental fund balances and net assets of governmental activities as reported in the government-wide statement of nets assets. These differences primarily result from the long-term economic focus of the statement of net assets versus the current financial resources focus of the governmental fund balance sheets. The details of these differences are reported in the reconciliation. The governmental fund statement of revenues, expenditures, and changes in fund balance includes a reconciliation between net changes in fund balances-total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. These differences are the result of converting from the current resources measurement focus and modified accrual basis for governmental fund statements to the economic resources measurement focus and full accrual basis used for government-wide statements. The details of these differences are reported in the reconciliation.


December 31, 2011

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Note 3. Stewardship, Compliance, and Accountability

Stewardship, compliance, and accountability are key concepts in defining the responsibilities of the Town. The use of budgets and monitoring of equity status facilitate the Town’s compliance with legal requirements. Budgets and Budgetary Accounting

The Town Board adheres to the following procedures in establishing the budgetary data reflected in the financial statements: In accordance with State statutes, prior to October 15, the Town Clerk submits to the Town

Board a proposed operating budget for the calendar year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them for the upcoming year, along with estimates for the current year and actual data for the two preceding years. The State statutes require more detailed line item budgets be submitted in summary form. In addition, more detailed line item budgets are included for administration control. The level of control for the detailed budgets is at the Fund level.

Public hearings are conducted to obtain taxpayer comment.

Prior to December 31, the budget is legally adopted through passage of a resolution.

The Town Clerk is required to present a monthly report to the Town Board explaining any

variance from the approved budget.

Formal budgetary integration is employed as a management control device during the year for all funds of the Town.

Appropriations lapse at the end of each calendar year.

The Town Board may authorize supplemental appropriations during the year.

Budget amounts included in the financial statements report both the original and final amended budget. There were revisions made to the original budget during the year.

Budgets for governmental funds are adopted on a basis consistent with accounting principles generally accepted in the United States of America, except for long-term receivables and advances and capital lease financing which are budgeted when liquidated rather than when the receivable/liability is incurred. Budgets for enterprise funds are adopted on a basis consistent with the spending measurement focus of the governmental funds.


December 31, 2011

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Note 3. Stewardship, Compliance, and Accountability, Continued

Expenditures over Appropriations

Per C.R.S. 29-1-108(2), appropriations are made by fund or spending agency (e.g. department) within a fund at the discretion of the Town Board. The Board by Resolution has made appropriations at the fund level and thus, expenditures may not legally exceed budgeted appropriations at the fund level. The individual Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget to Actual reports as listed in the table of contents report those funds that exceeded approved budget appropriations. The Capital Improvement and Garbage funds incurred expenditures/expenses over appropriations for the year ended December 31, 2011. Tax, Spending and Debt Limitations Colorado voters passed an amendment to the State Constitution, Article X, Section 20, which has several limitations, including revenue raising, spending abilities, and other specific requirements of state and local governments, excluding “enterprises.” The Amendment requires that an emergency reserve be maintained at three percent of fiscal year spending (excluding bonded debt service). A portion of the General Fund’s fund balance is classified as restricted for emergencies as required by the Amendment. The Town is not allowed to use the emergency reserves to compensate for economic conditions, revenue shortfalls, or salary or benefit increases. The Amendment is complex and subject to judicial interpretation. The Town believes it is in compliance with the requirements of the Amendment. However, the entity has made certain interpretations in the Amendment’s language in order to determine its compliance.

Debt Covenants

See the supplementary information listed in the on page 55 for compliance with debt covenants.

Note 4. Deposits and Investments

A summary of cash and investments as shown on the statement of net assets follows: Cash on hand 1,374$ Cash in bank 6,984,230 Colorado Trust 976,790 Certificates of deposit 1,091,462

Total cash and investments 9,053,856$


December 31, 2011

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Note 4. Deposits and Investments, Continued

Deposits

Custodial Credit Risk For deposits this is the risk that in the event of a bank failure, the government’s deposit may not be returned to it. The Town does not have a formal policy for custodial credit risk; however, the Colorado Public Deposit Protection Act (PDPA) requires that all units of local government deposit cash in eligible public depositories; eligibility is determined by state regulators. Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is determined by the PDPA. The PDPA allows the institution to create a single collateral pool for all public funds. The pool is to be maintained by another institution or held in trust for all the uninsured public deposits as a group. The market value of the collateral must be at least equal to the aggregate uninsured deposits. Collateral in the pool is considered to be equal to depository insurance pursuant to definitions listed in GASB Statement No. 40. At December 31, 2011 cash on hand was $1,374 and the carrying amount of the Town’s deposits was $6,984,230. As of December 31, 2011 the bank balance of the Town’s deposits was $7,022,333 of which $251,554 was insured by federal depository insurance and $6,770,779 was collateralized by the PDPA as noted above. Investments

Colorado statutes specify investment instruments meeting defined rating and risk criteria in which local government entities may invest. Authorized investments include obligations of the United States and certain U.S. government agency securities; certain international agency securities; general obligation and revenue bonds of U.S. local government entities; bankers’ acceptances of certain banks; commercial paper; local government investment pools; written repurchase agreements collateralized by certain authorized securities; certain money market funds; and, guaranteed investment contracts. The Town’s investment policy follows Colorado statutes. At December 31, 2011 the Town’s investments included certificates of deposit and funds held in the Colorado Government Liquid Asset Trust (COLOTRUST). The COLOTRUST is an investment vehicle established for local government entities in Colorado to pool surplus funds. COLOTRUST operates similarly to a money market fund and each share is equal in value to $1.00. Investments of COLOTRUST consist of U.S. Treasury bills, notes and note strips and repurchase agreements collateralized by U.S. Treasury securities.

A designated custodial bank provides safekeeping and depository services to COLOTRUST in connection with direct investment and withdrawal functions of COLOTRUST. Substantially all securities owned by COLOTRUST are held by the Federal Reserve Bank in the account maintained for the custodial bank. The custodian’s internal records identify the investments owned by COLOTRUST. These pools are not required to and are not registered with the SEC. As of December 31, 2011 the Town had $976,790 invested in the COLOTRUST with a fair market value of $976,790 and maturities of less than one year. The COLOTRUST’s funds are rated AAA by Standard and Poor’s, Fitch’s and Moody’s rating services.


December 31, 2011

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Note 4. Deposits and Investments, Continued

Interest rate risk

Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The Town’s policy for managing its exposure to fair value loss arising from increasing interest rates is to comply with the provisions of the Colorado Public Deposit Protection Act (PDPA) which requires that the Town’s investment portfolio maturities do not exceed five years from the time of purchase.

Credit risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Town’s policy for reducing its exposure to credit risk is to comply with the provisions of the Colorado Public Deposit Protection Act (PDPA) which limits investment in commercial paper and corporate bonds to the top ratings issued by at least two nationally recognized statistical rating organizations such as Standard & Poor’s and Moody’s Investor Services.

Note 5. Restricted Assets

The Town reported $84,318 in restricted cash in the Sewer Fund as of December 31, 2011 as required by the Colorado Water Resources and Power Development Authority Loan Agreement. Restricted cash of $5,676,317 associated with the restricted net assets and restricted fund balances of the Town is reported in the governmental fund balance sheets and government-wide statement of net assets. The special improvement district receivable of $1,028,707 is reported as a restricted asset in the government-wide statement of net assets. This receivable is associated with the special assessment bonds described in the long-term debt footnote.


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Note 6. Capital Assets The following table summarizes the changes to capital assets for governmental activities during the year.

Governmental Activities: Balance Balance12/31/2010 Additions Deletions 12/31/2011

Capital assets, not being depreciated:Land 752,600$ -$ -$ 752,600$ Construction in progress - 16,823 - 16,823

Total capital assets, not being depreciated 752,600 16,823 - 769,423

Capital assets, being depreciated:

Buildings & improvements 6,365,148 33,448 - 6,398,596 Machinery and equipment 310,732 - - 310,732 Vehicles 364,920 118,955 (78,335) 405,540 Infrastructure 6,781,625 2,734,353 - 9,515,978

Total capital assets, being depreciated 13,822,425 2,886,756 (78,335) 16,630,846

Less accumulated depreciation for:Buildings & improvements (383,083) (177,082) - (560,165) Machinery and equipment (130,505) (29,993) - (160,498) Vehicles (219,601) (29,777) 67,155 (182,223) Infrastructure (2,302,433) (336,873) - (2,639,306)

Total accumulated depreciation (3,035,622) (573,725) 67,155 (3,542,192)

Total capital assets, being depreciated, net 10,786,803 2,313,031 (11,180) 13,088,654

Governmental activities capital assets, net 11,539,403$ 2,329,854$ (11,180)$ 13,858,077$

Depreciation expense was charged to the functions/programs of the City as follows:

Governmental Activities:General governmentPublic safetyPublic works/streetsParks & recreationHealth & welfare

Total depreciation expense - governmental activities

100,810$

573,725$

16,395 374,888

36,823 44,809


December 31, 2011

32

Note 6. Capital Assets, Continued The following table summarizes the changes to capital assets for business-type activities during the year.

Business Type Activities: Balance Balance12/31/2010 Additions Deletions 12/31/2011

Capital assets not being depreciated:Land and water rights 103,766$ -$ -$ 103,766$ Construction in progress - - - -

Total capital assets, not being depreciated 103,766 - - 103,766

Capital assets being depreciated:Buildings 291,860 26,350 - 318,210 Improvements and systems 16,218,010 164,750 - 16,382,760 Machinery and equipment 335,778 22,596 - 358,374

Total capital assets, being depreciated 16,845,648 213,696 - 17,059,344

Less accumulated depreciation for:Buildings (196,799) (7,822) - (204,621) Improvements and systems (2,659,351) (424,978) - (3,084,329) Machinery and equipment (53,139) (28,047) - (81,186)

Total accumulated depreciation (2,909,289) (460,847) - (3,370,136)

Total capital assets, being depreciated, net 13,936,359 (247,151) - 13,689,208

Business-type activities capital assets, net 14,040,125$ (247,151)$ -$ 13,792,974$

Depreciation expense was charged to the functions/programs of the City as follows:

Business-Type Activities:WaterSewerGarbage

Total depreciation expense - business-type activities

306,268 1,447

460,847$

153,132$


December 31, 2011

33

Note 7. Long-Term Debt The following is a summary of changes in long-term obligations for the year ended December 31, 2011:

Balance Balance Current12/31/2010 Additions Retirements 12/31/2011 Portion

Governmental Activities:

Town hall lease 1,657,241$ -$ (213,705)$ 1,443,536$ 220,126$ Special assessment bond 1,005,000 - (95,000) 910,000 90,000 Compensated absences 49,446 40,726 (48,691) 41,482 41,482

Total Governmental activityLong-term liabilities 2,711,687$ 40,726$ (357,396)$ 2,395,018$ 351,608$

Business-Type Activities:

Drinking Water Revolving Fund Loan 137,646$ -$ (21,446)$ 116,200$ 22,428$ Energy/Mineral Impact Assistance Loan 165,712 - (10,411) 155,301 10,931 Water Pollution Control Fund Loan 4,580,000 - (195,000) 4,385,000 200,000

Plus deferred amounts:For issuance premiums 181,010 - (10,868) 170,142 10,868 Total loans payable 5,064,368 - (237,725) 4,826,643 244,227

Compensated absences 11,119 13,968 (13,935) 11,153 11,153 Total Business-type activity

Long-term liabilities 5,075,487$ 13,968$ (251,660)$ 4,837,796$ 255,380$

Long-term liabilities for the primary government at December 31, 2011 are comprised of the following: Governmental Activities:

Special assessment debt:

910,000$

Special Assessment Bonds for the Town of Bayfield Special Improvement District No. 2000-1 (Bayfield Center Subdivision), due in annual principal and interest installments ranging from $144,375 to $148,325, bearing interest at 5.5%, maturing April 1, 2020. Repayment payable solely from the assessments levied on the SID.


December 31, 2011

34

Note 7. Long-Term Debt, Continued

Business-Type Activities:

Loans payable:

116,200$

155,301

4,385,000 4,656,501$

Total Loans and Notes Payable 5,566,501$

Loan payable to Colorado Water Resources and Power Development Authority Drinking Water Revolving Fund, secured by net system revenue, bearing interest at 4.5%, due in quarterly principal and interest installments of $6,819, maturing September 1, 2016.

Loan payable to Colorado Water Resources and Power Development Authority, secured by system property and net revenue, bearing interest from 2 to 3%, due in semi-annual principal, interest and fee installments ranging from $23,367 to $183,806, maturing August 1, 2028. The loan proceeds and obligations under the loan agreement were transferred to the Town on January 1, 2008 under the dissolution agreement of the Bayfield Sanitation District.

Energy and Mineral Impact Assistance loan payable to the Colorado Department of Local Affairs, bearing interest at 5%, due in annual principal and interest payme

financial statements for the fiscal year ended … · 2021. 1. 20. · town of bayfield, colorado...

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